fbHK50 Forecast | Deteriorating Hong Kong data bearish for HK50 | IFCM

Technical Analysis HK50 : 2020-09-11

Recommendation for Hang Seng Index:

Strong SellSellNeutralBuyStrong Buy

Below 24193.4

Sell Stop

Above 25827.1

Stop Loss

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Senior Analytical Expert
Articles 1590
RSI Neutral
Donchian Channel Neutral
MA(200) Sell
Fractals Sell
Parabolic SAR Sell

Chart Analysis

IFC Markets Tech Analysis

On the daily timeframe the HK50: Daily has fallen below the support line and is retreating under the 200-day moving average MA(200) which is falling itself. We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 24193.4. A level below this can be used as an entry point for placing a pending order to sell. The stop loss can be placed above 25827.1. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (25827.1) without reaching the order (24193.4), we recommend cancelling the order: the market has undergone internal changes which were not taken into account

Fundamental Analysis

Hong Kong private sector activity contraction accelerated in August. Will the HK50 retreat continue?

Recent Hong Kong economic data were weak. Business activity contraction accelerated in August, retail sales decline continued in July, and balance of trade deficit was bigger than expected. Thus, Markit reported Hong Kong PMI fell to 44.0 in August from 44.5 a month earlier. Readings below 50 indicate sector activity contraction. Retail sales fell 23.9% over year in July after 25.3% drop in June. And balance of trade deficit was H$29.8 billion after H$33.3 billion in June when a narrowing to H$27 billion was forecast. And industrial production report due Monday is expected to show manufacturing production dropped 9.5% over year in the second quarter in Hong Kong after a 4.6% decline in the first quarter of 2020. Deteriorating Hong Kong economic activity is bearish for HK50.

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